The Generic Drug Push Needs Further Clarity

The policy encourages indigenous production of APIs and Key Starting Materials (KSMs) in several ways. However, a more thorough approach is required to once again enable the domestic API industry to become competitive. The Indian government needs to focus on developing the local chemical industry which can then in turn support API manufacturing.

- Utkarsh Palnitkar

The generics business is facing challenges both in the domestic as well as the international market; on exports, Indian pharmaceutical companies are facing a sharp decline in returns as a result of increasing product price erosion, largely due to the consolidation of distribution channels and increase in competition in the U.S. This, coupled with reduced value of product patent expirations over the next five years, implies lower growth potential for the pharmaceutical sector.

On the domestic front, the environment for pharmaceutical companies remains challenging with more products coming under price control, increase in scrutiny by global regulators, high active pharmaceutical ingredient (API) import dependency and complex process for approval of new products.

In the midst of these growing concerns, the Department of Pharmaceuticals (DoP) introduced an action plan to strengthen the Indian pharmaceutical industry and has released the ‘Draft Pharmaceutical Policy – 2017’ to make essential drugs accessible at affordable prices, provide a stable policy environment, achieve self-sufficiency in drug manufacturing, ensure quality drugs and create a favourable environment for R&D. The top five highlights of the proposed policy are as follows:

Encourage domestic API manufacturing

It has been proposed that formulations prepared using indigenously produced API and its intermediates will be given preference in government procurement. Such formulations will be taken out of price control for five years with prices linked to the indigenous content of these formulations. The APIs which can be indigenously manufactured will be imported at peak customs duty. The policy also supports setting up of mega bulk drug parks having common facilities.